Not upheld: Objection to company dissolution; interpretation of loan agreement liability under Government guarantee scheme complaint against Metro Bank PLC

Decision detail

Summary

D, a company that received a Bounce Back Loan from Metro Bank, sought to dissolve but Metro objected to the strike-off application due to the outstanding loan debt. D's director argued that since Metro held a full Government guarantee, D should be released from liability and allowed to dissolve. The ombudsman found that the loan agreement clearly establishes D's continued liability for repayment regardless of the guarantee, which is provided to Metro as lender. Metro, as a creditor, is entitled to object to dissolution, which is normal practice and consistent with the Government scheme's requirement to pursue all recovery avenues. The ombudsman upheld the £50 compensation Metro had already paid for initially providing inaccurate information about who lodged the objection.

The Ombudsman's reasoning

The ombudsman found that the Bounce Back Loan agreement clearly establishes that D remains liable to repay the loan and the guarantee is provided to Metro, not D. These provisions are not incompatible. As D remains liable as a creditor's debtor, Metro is entitled to object to dissolution in its capacity as a creditor, which is normal practice. The ombudsman noted that lodging objections is part of the expected approach under the Government's guarantee scheme to ensure all recovery avenues are pursued. The £50 compensation for inaccurate information was deemed appropriate as it was unlikely to have caused significant additional inconvenience.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website